Japan's SMFG to halt all new financing of coal-fired power plants

FILE PHOTO: Workers clean windows next to a signboard of Sumitomo Mitsui Financial Group’s SMBC Friend Securities in Tokyo, Japan, January 23, 2017. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) – Sumitomo Mitsui Financial Group Inc said on Wednesday it is halting new financing for all coal-fired power plants, becoming the first major Japanese lender to make such a pledge amid increasing pressure on banks to cut coal-based funding.

The move by Japan’s second largest bank by assets comes after Prime Minister Yoshihide Suga announced last month that the country aims to nearly double its target for cutting carbon emissions and as governments and companies globally move towards decarbonisation.

While SMFG had not previously ruled out funding projects considered to be more environmentally friendly, such as so-called ultra-supercritical (USC) power plants that burn coal more efficiently than older designs, it removed the exception from its updated lending policy.

Reuters previously reported this potential move in early March.

“We have gotten rid of the criteria as some study showed even USC power plants would not reduce CO2 emissions dramatically,” Tatsuya Takeda, general manager of SMFG’s corporate sustainability department, told an online press briefing.

Market Forces, an Australian-based group that campaigns for banks and investment funds to end funding of fossil fuels as the climate crisis intensifies, welcomed the move but said SMFG should tighten its policies further.

“SMBC Group has taken a forward step in closing their previous policy loophole on lending to new coal power projects,” Megu Fukuzawa, a Market Forces campaigner, told Reuters by email.

“However, it is disappointing that it will still allow support for carbon capture and storage or mixed combustion technologies,” Fukuzawa added.

SMBC’s bigger rival, Mitsubishi UFJ Financial Group Inc, said last month it would stop financing upgrades of existing coal-fired power plants.

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